Review company pay practices for 2022

The new year brings new opportunities and hopes for relief from the nearly two-year pandemic. It’s also an opportune time for California employers to audit pay practices to ensure they meet state, federal and local wage and hour rules.

For 2022, companies should pay close attention to changes in the minimum wage, salary requirements for exempt workers and rules associated with paid leave for employees affected by COVID-19.

California’s minimum wage increase is the largest in the U.S.

Starting January 1, the Golden State enacted the most significant boost of all 50 states, raising the state minimum wage to $15 per hour, increasing $1 from last year. The increase only applies to employers with 26 or more workers.

The rate remains $14 per hour for companies with fewer than 26 employees. However, it’s scheduled to rise to $15 in 2023. The federal minimum wage remains at $7.25 per hour, where it’s been since 2009.

Additionally, dozens of California cities and counties enacted their own local minimum wages that went into effect this year or last July. Those rates range from $15 to $17.64 per hour, and most apply to all companies regardless of the number of workers.

Exempt employee salary thresholds also rise

Under California law, some workers qualify as exempt employees if they perform specific administrative, executive and professional duties for more than 50% of their work time. Most of these employees can be salaried as long as their pay is no less than twice the state minimum wage for full-time workers. The 2022 thresholds are:

  • $58,240 per year: Employers with 1 to 25 employees.
  • $62,400 per year: Employers with 26 or more employees.
  • Licensed surgeons and physicians: $91.07 per hour.
  • Computer professionals: $50 per hour, $8,679.16 per month or $104,149.81 per year.

Many California companies affected by worker shortages raised pay levels in 2021 above minimum thresholds to attract more qualified employees.

Minimum hourly rate for employees required to bring hand tools increases

Employers in California are generally covered by one or more Industrial Welfare Commission Wage Orders.  Most of those wage orders contain the following language in Section 9:

(B) When tools or equipment are required by the employer or are necessary to the performance of a job, such tools and equipment shall be provided and maintained by the employer, except that an employee whose wages are at least two (2) times the minimum wage provided herein may be required to provide and maintain hand tools and equipment customarily required by the trade or craft. This subsection (B) shall not apply to apprentices regularly indentured under the State Division of Apprenticeship Standards.

Based on the Wage Orders, an employer who requires an employee to bring their own hand tools to work must pay those employees at least $30.00/hour (26 or more employees) or $28.00/hour (less than 26 employees) effective January 1, 2022.